A bonus bonanza?
It must be getting close to pantomime season. Reports of wicked bankers have resurfaced. These greedy bogeymen are ready to plunder the gold chests of the City of London at the expense of everyone else.
It's an enduring myth that everyone in the "City" earns a small fortune and their plentiful coffers are regularly boosted by gargantuan bonuses.
It is true that a small minority will be getting huge bonuses.
Many people believe these are excessive, but given these organisations are not banks in the high street sense, it's not our money they are taking but that of other financial institutions.
So how does this work? The financial meltdown saw a number of players succumb or merge. The result is less competition. It's estimated that those left are using their scarcity to demand higher fees for more business that is coming their way.
Respected City forecasting outfit, the Centre for Economics and Business Research's (CEBR) Douglas McWilliams attributes the predicted rise in bonuses to a "lack of competition which is at the heart of the sharp rise in profitability."
Goldman Sachs is probably one beneficiary of this paucity of competition. It is setting aside £10.2 billion for the first nine months of 2009 to cover compensation and benefits - up 46% on a year ago.
But there needs to be a bigger perspective on this bonus story. A lot of people can clearly imagine a world without financial services but let's be blunt: London's unemployment figures would soar without City jobs.
At the last count there were around 305,000 employed in the City's financial services sector. Since the Credit Crunch there has been a loss of around 49,000 posts. That's a loss of tax revenue and unemployed City workers means less money spent on the high streets of the capital. And of course many more jobs are generated by the businesses that depend on the financial services sector.
CEBR are reporting the "unexpected speed with which the economy has turned the corner." Their prediction is that job creation is starting once again in the Square Mile, Canary Wharf and the West End. Whilst there are still many more applicants than jobs, they believe that around 20,000 jobs will be created by 2012.
That growing confidence of recovery appears to be reflected on the shop floor for those who avoid the cull in the past two years as mergers and acquisitions dried up and derivative traders and investment banks took a pounding.
In the meantime the world's leading economies, collectively known as the G20 have, established some new parameters within which they hope financial institutions will operate.
Bonuses are one element of these changes. Many banks have claimed they have signed up to the new tenants of a bonus culture. Of course as the bonus season gets underway we will soon be able to tell by how much.
A survey of City Professionals conducted by recruitment consultants Morgan McKinley in September reports that 82% expect to receive a bonus this year and most of those expect their bonuses to be similar to last year. 40% say they may even get a bigger bonus than last year. A significant 10% said they expected a bonus of around 100%.
All this reflects the improved conditions in the market. The FTSE has just posted its largest every quarterly gain.
So the question really revolves around whether new bonus structures will be devised which reflect the political desire to tie the bonus culture to long term growth in business rather than short-term returns on particular transactions. Whether bonuses will be offered in cash or stock? For that assessment we'll need to wait for the figures. I suspect there will be quite a few disappointed City workers.
But the reality is only a few City workers ever partake in any "bonanza" because the system isn't geared to pay all of them large bonuses. Whilst the bonuses at the top are quite outlandish, they are no more outlandish than young men who kick a football about in the Premiership.
Stories on City extravagance (and clearly there is plenty of that to report) rarely record that the average salary in the City now stands at around £52,000. If you look down the list of employees of local authorities you'll see a whole raft of people across the capital on those sorts of salary, not to mention public sector workers in the NHS, Education and the Civil Service.
Of course most City workers earn in the lower tier of salaries below £34,000. They can expect bonuses of a couple of thousand pounds. Whilst this is well paid by some standards, no-one will be living the high life in London on that sort of money. London needs the employment opportunities that the City offers; bonuses are part of the remuneration deal.
It's a bit like professional footballers in lower divisions being judged by the obscene salaries of the Premiership elite.